If a firm with credit terms of 1/10 net 30 were to change its terms to 3/10 net 30,the result would probably be
A) increased bank loans.
B) increased accounts receivable turnover.
C) an increase in the average level of accounts receivable.
D) a decrease in accounts payable.

Question

Quizplus · Accepted Answer

Changing credit terms to offer a larger discount for early payment (from 1% to 3%) encourages customers to pay their invoices earlier, which would likely increase the accounts receivable turnover rate by reducing the average collection period.

If a Firm with Credit Terms of 1/10 Net 30